October 2007
Joint venture operators in the mining and petroleum industries
On 22 August 2007, the ATO issued Practice Statement Law Administration PS LA 2007/2 (GA) which sets out the Commissioner’s guidelines as to the circumstances in which joint venture operators of a GST JV in the mining or petroleum industry can account for the GST on taxable supplies it makes on behalf of the participants in the JV that generate non-product sales income. This includes income such as the sale of fuel to subcontractors in a remote location, the provision of port facilities or a rail network to transport other entities’ product to ships for export, or the agistment of livestock on a mining tenement that is not currently being explored or exploited. The reason for the Practice Statement is the uncertainty that has arisen as to whether supplies that generate non-product sales income can be dealt with by the JV operator.
According to the Practice Statement, the Commissioner will accept the JV operator in the mining or petroleum industry accounting for any GST on non-product sales income where:
- the JV operator is the operator of a GST JV for the exploration or exploitation of mineral deposits (which includes petroleum, sand and gravel)
- the non-product sales are made by the JV operator on behalf of the participants
- the JV operator accounts for the non-product sales in the activity statement for the tax period applying to the JV operator for the JV, and
- the participants remain jointly and severally liable for the GST payable on the non-product sales.
The date of effect of the Practice Statement is 22 August 2007.
For further information, please complete the following form, or contact:
Kevin O’Rourke, Partner
PricewaterhouseCoopers Tax
Goods & Services tax
Phone: +61 2 8266 3114
Ken Fehily, Partner
PricewaterhouseCoopers Tax
Goods & Services tax
Phone: +61 3 8603 6216
